Rio Tinto sees strong appetite for assets on sale

LONDON, April 18 Thu Apr 18, 2013 9:18am EDT

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LONDON, April 18 (Reuters) - Rio Tinto told shareholders on Thursday it saw a lot of appetite for a growing list of assets up for sale, brushing aside concerns that a lack of buyers may complicate its efforts to boost profitability and slash debt.

Mining companies are under pressure from weaker prices and Rio is trying to sell assets including diamond and aluminium mines. It has begun the process of selling other operations including its Northparkes copper mine in Australia, thermal coal assets and a majority stake in Canada's largest iron ore producer.

But many industry analysts question its ability to find buyers at a good price, without which Rio faces the threat of a credit rating downgrade. Rio's debt more than doubled to $19.3 billion in 2012 and Standard & Poor's revised the company's outlook to negative in February.

"It is the case that we will have a lot of appetite for the assets that we are considering the sale of. It is not as if there is only one buyer. There are plenty of buyers - many of them customers, sovereign wealth funds, competitors," outgoing Chief Financial Officer Guy Elliott said.

"There is a long list of them that is well financed and able to buy these assets."

Rio's new management under Chief Executive Sam Walsh faced shareholders on Thursday for the first time since a shake-up in January ousted his predecessor following the company's first ever annual loss.

Shareholders gathered in central London expressed anger over hefty 2012 writedowns related to Rio's purchase of Canadian aluminium group Alcan and coal mines in Mozambique.

One shareholder described Alcan losses as "horrific".

"We ... have to acknowledge that the acquisition has had a significant negative impact on shareholder value and, as our owners, you have every right to expect that we do better," Chairman Jan du Plessis said, adding that the group "almost certainly paid too much" for Alcan.

The company said it still saw potential in its operations in Mozambique, which du Plessis said were in their "early days", denying that Rio had already tried to sell the asset.

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